Category: Trading

The more often you buy and sell shares the more chance your investment nerve will be challenged and your emotions often brought into the frame. History shows us that the most successful investors of all time are those who can hold their nerve, take emotion out of the situation and look at cold hard facts. So, how can you learn to hold your investment nerve in challenging times?

Focus on the fundamentals

You may see wild swings in share prices as a consequence of market conditions, sector conditions or perhaps there is something going on with a particular company. What often start out as “small whispers” can very quickly grow arms and legs and lead to a tanking for a company share price. On the plus side, markets may overreact on the upside and the downside but in the end they will find a balance. Remember, the level of the share price is made up of information in the public domain and that still private. Continue reading “Learning to hold your investment nerve”

As US markets began to rise after Donald Trump’s inauguration as president of the USA there were many experts predicting a short term slump. Investors seemed uninterested in political concerns and continued to plough money into the markets. Much was being taken for granted in terms of US economic recovery, interest rates and political stability. However, over the last couple of weeks we have seen some significant volatility in US markets. Has this been brought about by the herd mentality?

Cryptocurrencies signalled the start of the correction

It seems difficult to believe that the massive volatility of late is over and the markets are set to return to their growth path. Well, a number of experts believe that this is the case and this short-term “reality-check” has happened, been digested and ultimately ignored by investors. How does this relate to cryptocurrencies? Continue reading “Does the herd mentality exaggerate market volatility?”

When the Dow Jones Industrial Average index touched 26,616.41 on 26 January there was no indication of the volatility to come. While the next couple of days saw a pullback in the market, something many put down to profit-taking, Thursday, 1 February 2018 will go down in the diary of investors. A 600 point fall in the index was followed by a fall of over 1100 points and then we had the much expected “dead cat bounce” and then another 1000 point fall on 7 February. The US market currently stands at 24,190.9 which is a fall of nearly 2500 points since 26 January. What does the short term hold for US investors and their worldwide comrades?

Cost of finance

Since the US mortgage crisis of 2008 there is no doubt that the historically low cost of finance has fuelled investment in the stock market as well as real estate. The problem now is that inflation is set to spike in the short term and the interest rate cycle has well and truly turned upwards. Ironically, as a consequence of stock market volatility we may see a short-term delay in further US interest rate rises but make no mistake about it, they are coming! Continue reading “Tin hats at the ready, US markets under pressure”

Many investors may have missed the ongoing dispute between Qatar and its neighbours which is in danger of escalating. Saudi Arabia, Egypt, Bahrain and the United Arab Emirates have all severed diplomatic, trading and transport links with Qatar. In a worrying development there does not appear to be any middle ground for talks between the parties and there are serious concerns that they could escalate in this powderkeg region.

What is the dispute about?

In essence the dispute seems to be about terrorism amid allegations that Qatar has been directly and indirectly supporting various terrorist groups. Over the last few days Donald Trump has even commented on Qatar links with terrorism suggesting it is a “funder of terrorism at a very high level”. The fact this was just before the US sold $12 billion worth of warplanes does kind of undermine the criticism directed at Qatar. Continue reading “Will the Qatar dispute have an impact on worldwide stock markets?”

There is an old proverb on the stock markets which is “sell in May and go away” suggesting that investors are better off selling up in May and coming back in November. The idea behind this proverb is that May to October tend to be relatively quiet periods for the stock market compared to November to April. A number of research reports over the years have highlighted this phenomenon as something of a regular occurrence with an average difference of around 10% on stock market performance over the two different periods. However, are we really bothered about the overall stock market if we are looking to trade individual stocks?

Buying opportunities

Just because people go on holiday, the summertime brings a different attitude and markets do seem a little bit calmer, does not mean there are not buying opportunities. Can you imagine the number of investors waiting for others to sell in May and go away so they can pick up cheap stock which has perhaps been oversold? Continue reading “Sell in May and go away”

William “Billy” Walters a Las Vegas gambler has been found guilty of insider trading with sentencing due in July. The 70-year-old sports gambler was found guilty by a jury who took just two days to come to their decision. Historically insider trading has been extremely difficult to prove with many cases falling by the wayside before they even get to court. However, the regulators have linked Billy Walters to golfer Phil Mickelson who was dragged into the issue.

A $40 million cash pile

It is astounding to learn that Billy Walters amassed a $40 million fortune which the regulators proved to be from illegal gains. The case grabbed the headlines when Phil Mickelson was put on the prospective witness list although he never actually testified. Legal records show that the US golfer was given a tip by Walters back in 2012 which led to a near one million-dollar profit on the purchase of shares in Dean Foods. While Mickelson was never charged he agreed to repay his ill-gotten gains and walked away scot free. Continue reading “Billy Walters found guilty of insider trading”

Wherever your tax status resides there will be an array of different actions you can take to assist your family when you are alive and when you are passed away. Many people ignore tax planning and “cross that bridge when they come to it” but by the time it come it can be too late and your tax liability may have increased dramatically. It is therefore imperative that you consider tax planning for your family as early as possible.

Investment vehicles

Any tax planning you take will depend upon your own personal financial situation and those of your family. There are companies and specific investment vehicles you can use to minimise your tax going forward and also minimise any potential inheritance tax. The rate of inheritance tax and the level at which it comes in varies from country to country so you need to take professional financial advice. It is not enough to consider inheritance tax further down the line because you could already have built up a potentially large tax liability. Continue reading “Tax planning for your family”

Bill Gates is best known as the co-founder of Microsoft although he is also a world renowned philanthropist. Today’s publication of the Forbes rich list sees the man himself retain top spot for the fourth consecutive year. It is believed his personal wealth has increased from $75 billion in 2016 to a staggering $86 billion!

Other movers and shakers

Overall the number of billionaires has increased by a net 233 since the 2016 Forbes list was released. In a sign of the times, this is the largest annual jump in more than three decades with gainers outnumbering losers by more than 3 to 1. There does seem to be a particular emphasis on technology which would indicate a renewed appetite from investors – which was shown in the recent Snapchat IPO? Continue reading “Bill Gates tops Forbes list for fourth consecutive year”

There are many different strategies to use to protect your capital but stop loss limits seem to be one of the most popular. In effect this takes away any decision once a stock hits a particular level and, if the strategy is followed, you simply hit the button and sell. So, do stop loss limits work?

Market volatility

Whether you hold a stock which has the best potential in the world, if markets are volatile and outside influences come into play, then all stock prices will be affected. If we look at the mortgage crisis in 2008, which led to a worldwide depression, this impacted all stock prices no matter their potential for the future. There is one danger of using stop loss limits, the chance that maybe market volatility is short-term and you could sell before the bounce. Continue reading “Do stop loss limits work?”

Even though the large pharmaceutical groups of today dominate the marketplace it is worth remembering that they were once a minnow in a big pond. It would be fair to say it is more difficult to become a “major player” today but there are companies with groundbreaking technology and treatments which have the potential to make it to the top table. So, what do you need to look out for when trading pharmaceutical stocks?

Overbought and oversold

As sure as night becomes day, small pharmaceutical stocks with a good story going forward will on numerous occasions be overbought and oversold. In the event of good news investors will pile on board pushing the price to unsustainable levels and the slightest disappointment might see speculators bailout. This is something which happens with all companies on a regular basis but perhaps more so with pharmaceutical and technology stocks because of their relatively high risk/reward background. Continue reading “Trading pharmaceutical stocks can be rewarding”